When OPEC+ holds its periodic meeting early next month, the crumbling global economy would have witnessed major developments such as a new power structure in the US Congress following the midterm elections on November 8.
Among other developments is the gloomy shadow of winter, which will reflect on the lives of people in cold climes as well as the approach of Christmas and New Year festivities, which will require more spending. It seems Santa Claus will not be able to distribute presents the way he used to, either due to a lack of sufficient spending prowess or a lack of heating.
Above all is an economic situation that is fast deteriorating, and with effects on growth and living standards in various countries. Consequently, the OPEC+ will find facing a number of complex issues to deal with. This gloomy scene requires them to take sensitive decisions that will be met with various levels of reaction. Some of these will understand the nature of the decisions, while others will decry them based on their own difficult economic conditions.
The experience of OPEC+ in the past two years indicates two main pillars, the first of which is the unity of the organisation’s members and their adherence to the gains they achieved thanks to this unity. The second is the highly flexible decisions taken, which has maintained a balance in oil markets and prices at fair rates. Despite the uproar caused by the group’s decision to cut oil production by 2 mbd at the last meeting, the world has absorbed its rationale after the decline in oil prices.
Stability at all costs
This led to a drop in media campaigns against the decision, knowing that prices have returned to previous levels. This means that oil prices have maintained their October levels.
The world is awaiting for the next meeting of OPEC+ with great interest as many countries and businesses will take decisions based on what the group decides next. Experiences show the group has not taken any decisions that harm the global economy or oil-consuming countries. All decisions have meant ensuring oil supply stability and market balance while maintaining a fair price.
The upcoming meeting is expected not to go beyond the group’s stated policy of market stability. The conditions of the oil market will be evaluated technically and commercially, and if there is a balance between supply and demand, it is unlikely additional decisions will be taken to slash production.
OPEC+ will be flexible in responding
If prices soar, it is expected production will be increased, considering the deteriorating economic conditions worldwide. And if the prices fall, it is very likely the group will impose further production cuts regardless of its repercussions in relations of its member countries with the rest of countries. The balance will tilt in favour of preserving interests, which are more important than ever for all countries, including those in the OPEC+.
Therefore, all options are on the table with regard to the December meeting, but no one expects the group would take decisions that contradict its interests, which is to ensure supplies, market balance and fair prices.
All these points constitute the sides of the triangle on which the group’s decisions are based. The OPEC+’s flexible policy requires consumer countries to arrive at an understanding and cooperation with the group, which has always demonstrated a readiness for such cooperation. This is especially so since the media campaigns, which escalated after the previous OPEC+ meetings, which increased tensions in oil markets and sharp fluctuations that were not beneficial to the world’s economy.